REAL ESTATE PROPERTY MANAGEMENT AREAS OF EXPERTISE

Maximizing a property’s return on investment relies on many areas of expertise, including:

Property Acquisition: Engaging Hallmark & Johnson’s real estate property management team when a potential acquisition is identified can be very advantageous. Our experienced property investors can advise in areas of underwriting, capital structure, lease values specific to the submarket, cost of property improvements and investment and exit strategy determination. All of the aforementioned areas are critical to proper underwriting assumptions that translate to the price paid for a property. The ingoing price paid for investment real estate is ordinarily the determining factor for the investment’s success.

Real Estate Property Management: It is critical that the day-to-day property management is in lock step with the determined investment strategy. Our investment-experienced leadership ensures this occurs by consistently maintaining the best property conditions to maximize rent and reduce large capital repairs. Similarly, when making repairs/improvements, it is important to not over-improve or under-improve the property. For example, when turning a unit, and needing to replace aged appliances, there are many choices. It is important to align the action with the market position intended for that property.

Local Market Expertise: Maximizing rents can only occur when the property managers are highly knowledgeable regarding the Chicago and Chicago suburb market. This drills down from city, to neighborhood to even particular streets. Experienced investors understand this value and demand that those who lease their properties have this in-depth knowledge.

Capital Markets: Understanding where a particular property slots in the capital markets results in accurate value determination. At Hallmark, we understand what capitalization rates apply to various properties, what financing terms would be available and what risk-adjusted returns equity providers would require.

Examples:

5200 S. Harper Chicago (Hyde Park)

44 apartments, 2 commercial spaces

Advised an out of state investor in the acquisition process, that 1) in place rents were below market, 2) property was under improved for the market, 3) existing commercial tenant lease was below market 4) tenant safety and security require improvement in order to maximize occupancy and rents, 5) advised the type of tenant that would occupy vacant commercial space, and recommended brokers that would find such a tenant. H & J underwrote the property, created an investment strategy, obtained financing and purchased the property on the investor’s behalf. The property was immediately improved including a comprehensive security system, rents were increased over time, the vacant commercial space was leased. Within 2 ½ years of purchase, the property was sold and the owner earned a 24% internal rate of return on its capital.

Stanford Building

This Chicago apartment property was managed by H & J for approximately 8 years. In 2015, it sold for $21,000,000, a price so favorable to the seller (H & J client) that it was reported in Crain’s as one of the area’s most notable real estate deals.

901 West Madison

H & J advised and managed for an investment group acquiring a bulk purchase of condominium units in this building. H & J was directly involved in the debt restructuring, leasing, positioning, and ultimate sell off of the individual condominiums. H & J leveraged its local relationships to hire one of the most experienced and savvy brokers for that product type and sub-market. Within nine months, all units were sold, and the investors doubled their investment capital.

Bronzeville Condominiums

Similar to 901 Madison, except the investors choose to finance out their equity (plus significant additional cash) from the value increase created under H & J’s management. The investors are currently enjoying significant cash flows from the rents on the units with no invested equity.

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